Announcement of firm intention of the JSE to make a

October 27, 2008 at 5:25 AM EDT
JSE - JSE Limited - Announcement of firm intention of the JSE to make a         
conditional offer to acquire the entire issued ordinary share capital of the    
bond exchange of South Africa Limited                                           
JSE Limited                                                                     
(Incorporated in the Republic of South Africa)                                  
Registration number 2005/022939/06                                              
Share code:  JSE    ISIN:  ZAE000079711                                         
LIMITED ("BESA")                                                                
1.   INTRODUCTION                                                               
On Friday 24 October 2008, the JSE informed the Chairperson of BESA of its      
intention to make a conditional offer to all the ordinary shareholders of BESA  
("Ordinary Shareholders") to acquire the entire issued ordinary share capital of
BESA ("the Proposed Offer").                                                    
2.   BUSINESS OF BESA                                                           
BESA is a public company operating and licensed as an exchange in South Africa  
and specialises in interest rate products. The operations of BESA include the   
BESA Guarantee Fund Trust of approximately R99 million ("the Fund").  The Fund  
is consolidated by BESA in terms of accounting requirements, although its assets
do not belong to BESA or to the Ordinary Shareholders.                          
BESA has recently completed a rights issue to raise R81 million and, according  
to the circular to BESA shareholders dated 5 September 2008 ("Rights Issue      
Circular"), BESA's entire issued share capital following the rights issue will  
consist of 1 924 657 ordinary shares ("BESA Shares").                           
3.   RATIONALE AND BENEFITS                                                     
The world of capital markets is fast changing and in response exchanges need to 
innovate continually to ensure they remain relevant to issuers and investors    
alike. It is hard to have a well-performing modern economy without a good       
financial system.  Strong capital markets are an essential part of such a       
financial system, to allow participants to mobilise savings, allocate capital   
and manage risk.  It is therefore very important from a national interest       
perspective that there are deep markets in debt and equity products and, as far 
as possible, the trading, clearing and settlement in South African financial    
instruments is conducted in South Africa in a globally competitive manner.  This
will enable local participants and the local economy to derive the benefits of a
vibrant financial system.                                                       
Exchanges such as the JSE and BESA face strong competition for the trade in     
South African instruments from both international exchanges and the over-the-   
counter ("OTC") market.  Various market participants have indicated on numerous 
occasions that neither the JSE nor BESA currently offer market participants a   
solution that will encourage them to execute a larger percentage of their trades
in South African interest rate instruments through a local exchange or local    
infrastructure. As a result a large proportion of trading in spot instruments   
continues to take place offshore, and the on-exchange trade in derivative       
interest rate instruments in South Africa is low by international standards.    
This, in turn, has negative implications for the robustness, efficiency and     
competitiveness of the local economy more generally.  These are concerning      
developments for all South Africans.                                            
In common with many market participants, the JSE believes that the optimal      
method to improve the volumes and efficiency of dealings in South African       
interest rate products is through the consolidation of BESA and the JSE, which  
will enable the exchanges to leverage the best of what BESA and the JSE each    
have to offer.  This consolidation will enable the exchanges to realise the     
following benefits for issuers, investors and market participants:              
improved, common risk management processes;                                     
reduction in cost through economies of scale;                                   
enhanced market model funded from existing capital without requiring            
participants to fund development; and                                           
increased variety of product and increased liquidity.                           
The consolidation can be achieved through the implementation of the Proposed    
Offer or the acquisition of the business of BESA as a going concern by the JSE. 
4.   SALIENT TERMS OF THE PROPOSED OFFER                                        
4.1  Proposed Offer and offer consideration                                     
The Proposed Offer will be made in accordance with all applicable requirements  
of the Securities Regulation Code on Takeovers and Mergers ("the Code") and the 
Companies Act 61 of 1973 ("the Companies Act").  In terms of the Proposed Offer,
the JSE will offer to acquire all the BESA Shares from the Ordinary Shareholders
("the Transaction").                                                            
The Offer Consideration payable under the Proposed Offer will, subject to the   
price adjustment provisions in paragraph 4.2.1, be R173 219 130 ("Offer         
Consideration") and will be settled in cash.  On the assumption that the entire 
issued share capital of BESA consists of 1 924 657 ordinary shares and that no  
options or other rights have been granted to any person for the issue of further
shares in BESA, this equates to a price of R90 per BESA Share and represents a  
premium of 106% (or R46.37 per BESA Share) over the net asset value per BESA    
Share excluding the Fund and a small discount of 6% (or R5.43 per BESA Share) to
the net asset value per BESA Share including the Fund as stated in the Rights   
Issue Circular.  The Fund value has been included in determining the price of   
the Proposed Offer because the JSE will, on the successful implementation of the
Proposed Offer, establish control over the Fund, continue to utilise the Fund   
for investor protection purposes and be obliged to consolidate the Fund for     
accounting purposes.  Should the above assumption regarding the number of BESA  
shares in issue and/or the granting of options or rights be incorrect, the offer
price per BESA share will adjust accordingly.                                   
It is the intention of the JSE to invoke the provisions of section 440K of the  
Companies Act should the Proposed Offer be accepted by Ordinary Shareholders    
holding not less than nine-tenths of the BESA Shares.                           
4.2  Adjustments to Offer Consideration and retention payment                   
4.2.1     The Offer Consideration will be adjusted under the following          
circumstances:                                                            Should the net asset value of BESA, including the Fund ("BESA NAV"),  
at the date on which the Proposed Offer becomes or is declared wholly           
unconditional ("the Final Date"), be less than R170 000 000, the Offer          
Consideration will be adjusted downward, on a Rand for Rand basis, with the     
amount of the difference.  The BESA NAV will be calculated in a manner          
consistent with the format and accounting policies applied in respect of the    
preparation of BESA's audited financial statements for the year ended 31        
December 2007.                                                            Should the JSE within 30 days after the Final Date find that: BESA is party to any agreement of whatever nature with any third      
party, other than the lease agreement in respect of the premises occupied by    
BESA in Melrose Arch, in terms of which BESA has or will have any financial     
obligations exceeding R5 000 000 per annum per agreement or which will endure   
for longer than 3 years after the Final Date, the Offer Consideration will be   
reduced by the present value, calculated at a discount rate of 12.5%, of (i) the
amount by which each such financial obligation exceeds R5 000 000 during the    
relevant 3 year period; and/or (ii) all the amount(s) payable by BESA after the 
expiry of the relevant 3 year period;                                   BESA is party to any agreement which contains a termination clause    
that will be triggered as a result of the Proposed Offer, the Offer             
Consideration will be reduced by the amount of any penalty and/or damages that  
may be payable or become payable by BESA pursuant to the enforcement of such    
termination clause;                                                     the Fund has any outstanding tax liabilities (including penalties and 
interest) of whatever nature as at the Final Date, the Offer Consideration shall
be reduced by the amount of such liabilities, irrespective of whether such      
liabilities are then due and payable.                                           
4.2.2     The calculation of any adjustment in the Offer Consideration will be  
performed by the auditors of BESA at the JSE's cost within 60 days after the    
Final Date and the results of their findings will be disclosed to the Ordinary  
Shareholders as soon as reasonably possible after such results become available.
4.2.3     Notwithstanding the possible adjustment of the Offer Consideration,   
R105 856 135 of the Offer Consideration (or R55 per BESA Share) will be paid to 
Ordinary Shareholders within 7 days of the Final Date, while the balance will be
retained in trust pending the finalisation of the amount of the adjustment to   
the Offer Consideration.  The amount due to Ordinary Shareholders following the 
finalisation of the adjustment to the Offer Consideration (if any), will be paid
within 5 business days of the auditors having made their determination, as      
contemplated in paragraph 4.2.2.                                                
4.3  Conditions precedent to the Proposed Offer                                 
4.3.1     The Proposed Offer will be subject to the fulfillment or waiver, as   
the case may be, of the following conditions precedent ("Conditions Precedent"):   the Proposed Offer being accepted by Ordinary Shareholders in respect 
of at least 50% plus one of all the BESA Shares by no later than 60 days after  
the date on which the offer document detailing the Proposed Offer is posted to  
Ordinary Shareholders ("Posting Date");                                   the approval of the Transaction, to the extent required, by the       
Financial Services Board, by no later than 60 days after the Posting Date;   the JSE obtaining the necessary exchange control approval for the     
Transaction from the South African Reserve Bank by no later than 60 days after  
the Posting Date;                                                         the unconditional approval of the Transaction by the competition      
authorities, in terms of the Competition Act 89 of 1998, by no later than 120   
days after the Posting Date, and if such approval is granted subject to         
conditions, the JSE confirming to BESA, in writing, within 125 days of the      
Posting Date, that the conditions are acceptable to the JSE;              BESA has not within 60 days of the Posting Date disposed of the BESA  
Business (as defined in paragraph 5) to the JSE, in terms of a written sale of  
business agreement, which agreement -                                   has become unconditional in accordance with its terms, save for any   
conditions relating to regulatory approval; and                         has been authorised or ratified by a special resolution of Ordinary   
Shareholders in general meeting as required by section 228 of the Companies Act;
and                                                                       the Securities Regulation Panel ("SRP") approving the circular        
detailing the Proposed Offer.                                                   
4.3.2     The Conditions Precedent in paragraph and are for the 
benefit of the JSE and can be waived by the JSE at any time.                    
4.3.3     Subject to the prior approval of the SRP, the JSE shall be entitled to
extend any of the dates for fulfilment of the Conditions Precedent.             
Notwithstanding the Proposed Offer, the JSE has expressed to the BESA Board that
it is the preference of the JSE to acquire the entire business of BESA          
(including all its assets and liabilities, as well as the Fund) ("the BESA      
Business") as a going concern because the acquisition of the BESA Business,     
rather than the BESA Shares, will significantly accelerate  the ability of the  
JSE to integrate the BESA Business with its own related businesses, thereby     
bringing forward the synergy benefits and cost savings for market participants. 
The JSE is, however, mindful of the fact that the disposal by BESA of the BESA  
Business will, in terms of section 228 of the Companies Act, have to be         
authorised or ratified by the Ordinary Shareholders by way of a special         
resolution.  Due to the constraints placed on the JSE by the Code, the JSE has  
up to the date of this announcement been unable to adequately canvas the        
Ordinary Shareholders to determine with certainty that there will be the        
requisite support for such a special resolution.  The JSE has therefore elected 
to structure the Transaction as an offer for the BESA Shares, while creating,   
through the conditionality attaching to the Proposed Offer, the opportunity for 
the JSE, BESA and the Ordinary Shareholders to conclude and approve the         
acquisition of the BESA Business.                                               
The table below sets out the unaudited pro forma financial effects of the       
Proposed Offer on earnings per share ("EPS"), headline EPS, net asset value     
("NAV") and net tangible asset value ("NTAV") per share of the JSE, based on the
audited results of the JSE and BESA for the 12 month period ended 31 December   
2007. The latest interim results of the JSE have not been used, as the BESA     
interim results are not publicly available. If the BESA interim results become  
available, the pro forma effects will be calculated and released on SENS if     
materially different from the numbers disclosed below.                          
The unaudited pro forma financial effects are the responsibility of the         
directors of the JSE and have been prepared for illustrative purposes only, to  
provide information about how the Proposed Offer may have affected JSE          
shareholders on the relevant reporting date.  Because of its nature, the        
unaudited pro forma financial effects may not give a fair reflection of the     
JSE's future earnings or of the JSE's financial position, changes in equity,    
results of operations or cashflows after implementation of the Proposed Offer.  
                     Before the       After the           Change                
                     acquisition(1)   acquisition(3,6)    (%)                   
                     (cents)          (cents)                                   
    EPS              321.3            317.2(4,5)          (1.3%)(2)             
    Headline EPS     292.1            275.7(5)            (5.6%)                
    NAV per share    1 302.2          1 314.5             0.9%                  
    NTAV per share   1 302.2          1 313.7             0.9%                  
    Number of        85 140 050       85 140 050          -                     
    shares in issue                                                             
    Weighted         85 038 891       85 038 891          -                     
    average number                                                              
    of shares in                                                                
Extracted from the audited annual financial statements for the JSE Limited for  
the twelve months ended 31 December 2007. Balance sheet adjustments have been   
determined assuming that the acquisition occurred on 31 December 2007, while    
income statement adjustments were made assuming that the acquisition occurred on
1 January 2007.                                                                 
The EPS dilution does not fairly represent the effect on the JSE's earnings.    
BESA incurred a loss in 2007 and, based on the statement in the Rights Issue    
Circular, a further loss will be incurred for the 2008 financial year. This will
therefore reduce both the net asset value and the negative goodwill at the date 
of acquisition, which is not reflected in the pro forma financial effects as    
they are calculated on historical results.  The effect of the Proposed Offer on 
earnings per share of the JSE is more accurately reflected by the 5.6% dilution 
in Headline EPS, which excludes the effect of negative goodwill on the income   
Income Statement Adjustments                                                    
Includes 100% of the audited results of BESA for the twelve months ended 31     
December 2007.                                                                  
Accounting for negative goodwill, computed as the difference between the        
purchase price and the consolidated net asset value of BESA.                    
Accounting for interest foregone, at a rate of 10%, on the cash utilised to fund
the acquisition and the resultant tax impact.                                   
Balance Sheet Adjustments                                                       
Includes 100% of BESA's assets and liabilities at 31 December 2007, as extracted
from the pro forma balance sheet at 31 December 2007 included in the Rights     
Issue Circular.                                                                 
7.   STAFF AND MANAGEMENT OF BESA                                               
BESA's staff is critical to its operations and the JSE is therefore committed to
retaining all BESA's staff on terms and conditions that are no less favourable  
than those they currently enjoy should the Transaction be implemented           
8.   CONFIRMATION OF FINANCIAL RESOURCES                                        
First National Bank of South Africa Limited has furnished confirmation to the   
SRP that the JSE has sufficient resources available to satisfy full             
implementation of the Transaction.                                              
9.   HOLDING OF SECURITIES IN BESA                                              
Neither the JSE nor any of its directors currently hold or control any shares in
10.  DOCUMENTATION AND SALIENT DATES                                            
A circular, containing full details of the Proposed Offer, will be posted to    
Ordinary Shareholders no later than 30 days after the date of this announcement.
A further announcement setting out the salient dates of the Proposed Offer will 
be made in due course.                                                          
27 October 2008                                                                 
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Webber Wentzel                                                                  
Date: 27/10/2008 08:04:02 Produced by the JSE SENS Department.